Phoenix, Ariz. —   The Arizona Corporation Commission voted 4-1 on Wednesday, December 3, 2025, with Commissioner Rachel Walden casting the dissenting vote, to approve an Energy Supply Agreement (ESA) between Tucson Electric Power Company (TEP) and Humphrey’s Peak Power LLC for a planned data center campus proposed to be built in Pima County.  The Commission’s role in this case is to review the ESA to ensure it meets regulatory requirements and provides protections for all TEP customers. 

"TEP has an obligation to serve all customers within their territory,” said Commissioner Lea Márquez Peterson. “While the County Board of Supervisors has voted to rezone and sell the land for this development, the Commission’s vote this week to ensure that residential ratepayers are protected from cost shifts is vitally important to the region.” 

“Our vote to approve the Special Contract between TEP and the data center development company approved financial terms and conditions to protect existing customers,” said Commissioner Lea Márquez Peterson. “If we had denied the special contract, TEP’s existing rates for large load customers would have prevailed without the protections. As a Commissioner and a Tucson resident, I believe it is in the best interest of the ratepayers to approve the Special Contract and the protections it provides." 

“Regrettably I had to vote against this contract,” said Commissioner Rachel Walden. “I am fully supportive of the buildout of this industry in our state, and the potential it holds for Arizona. But TEP’s contract with the developer did not go far enough in providing ratepayer protections for existing customers. I want to see longer-term contracts that contain upfront requirements to offset infrastructure needs, and early exit consequences that will make TEP whole; not leave existing customers holding the bag.”

The 10-year agreement includes minimum monthly billing requirements, the gradual increase in load over 18 months to ensures safe and reliable service for all TEP customers, and provisions that confirm Humphrey’s Peak Power LLC will be financially responsible for all costs related to building new infrastructure that serves only the proposed data center campus. 

“I’m pleased that TEP confirmed the data center will fully cover the construction costs for the necessary line extensions and the new switchyard, ensuring that no expenses are shifted onto other customers,” stated Vice Chair Nick Myers. “I believe the Energy Supply Agreement includes strong customer protections—such as termination fees, minimum billing payments, and safeguards if the data center does not operate as planned. In fact, adding the data center will reduce transmission costs for all other customers. This arrangement demonstrates that we can support economic development while protecting, and even benefiting, existing customers.”

More than three dozen members of the public spoke before the Commission during the Open Meeting.  The Commission asserts that its jurisdiction in this case is only over the generation tie lines and transmission infrastructure; the Commission’s vote is not affected by the type of project associated with the ESA.

“I appreciate all the public comments in this matter, and I hear and understand the concerns; however, Pima County approved the zoning for a data center,” said Commissioner Rene Lopez. “More importantly, regardless of the end user, TEP has an obligation to serve without discrimination.  I believe the ESA requested provides protections to the existing community against cost shifts and shields TEP from significant financial risk.  As Arizona braces for an unprecedented wave in load growth – from data centers and other large energy users alike – special contracts such as these are critical to maintaining grid reliability, safety, and affordability.”

To view all documents related to this case, go to https://edocket.azcc.gov/ and enter Docket No. E-01933A-25-0187.